The National Income is the total amount of income accruing to a country from economic activities in a years time.

1. National Income
Dr. B. G. Lobo
Vice Principal,
Faculty of Arts and Commerce,
Prof. Ramkrishna More College, Akurdi,
Pune-44
Dr. B. G. Lobo
Vice Principal,
Faculty of Arts and Commerce,
Prof. Ramkrishna More College, Akurdi,
Pune-44

2. 2.1 Meaning and Importance of National Income
2.2 Concepts GNP, NNP,GDP,PCI, PI,DI
2.3 Measurement of National Income : Methods
and Difficulties
2.4 Circular Flow of Income : Two Sector Model

3. 2.1 Meaning of National Income
National income means the value of goods and services
produced by a country during a financial year. Thus, it is the net
result of all economic activities of any country during a period
of one year and is valued in terms of money.
The National income is the total amount of income accruing to
a country from economic activities in a years time. It includes
payments made to all resources either in the form of wages,
interest, rent, and profits.
Simon Kuznets has defined national income as “the net output
of commodities and services flowing during the year from the
country’s productive system in the hands of the ultimate
consumers.”

4. Features of National Income
1
• National Income is a total of goods and services
2
• Calculated within the boundaries of a country
3
• Calculated in one Financial Year
4
• It is a Flow concept (over the period of time)
5
• Expressed in Monitory terms
6
• Calculated in Gross and Net terms
7
• Aggregate of all sectors

5. Importance of National Income
1 • Help to understand Economic position
2 • Understanding contribution of different sectors
3 • Distribution of National Income
4 • Help for Economic planning
5 • International comparison
6 • Study of Business Cycle
7 • Policy formation
8 • Help for Forecasting

6. Gross
National
Product
Net
National
Product
Personal
Income
Per
Capita
Income
Disposable
Income
Gross
Domestic
Product

7. Gross National Product

8. Net National Product

13. 2.3

15. Difficulties in Measurement of National Income
1. Existence of Non monetized Sector
2. Unrealistic and inadequate data
3. Problem of double counting
4. Transfer earning
5. Diversified occupations
6. Problem of free riders
7. Black money

16. FIRM HOUSEHOLD
2.4 CIRCULAR FLOW OF INCOME : TWO SECTOR MODEL